Intellectual property law is good. Excess in intellectual property law is not. This blog is about excess in Canadian and international copyright law, trademarks law and patent law. I practice IP law with Macera & Jarzyna, LLP in Ottawa, Canada. I've also been in government and academe. My views are purely personal and don't necessarily reflect those of my firm or any of its clients. Nothing on this blog should be taken as legal advice.

Friday, June 26, 2009

Excess Access Copyright Tariff Ruling

While both sides will no doubt claim some element of victory, the Copyright Board's decision today in the K-12 reprography matter is bad news for Canadian educators, librarians, students, and taxpayers. The price of knowledge just went up a lot today in Canada.

Access Copyright (“AC”) was opposed by the provincial Ministers of Education (other than Quebec) and each of the Ontario School Boards (“the Educators”). It took that Board almost two years to issue a decision that essentially divides the amount sought by AC ($8.92) and the amount proposed by the Educators of $2.43 per FTE more or less down the middle to arrive at $5.16 per FTE. The exact arithmetic average would have been $5.68. Oh yes - there is a lot of detail about fair dealing - with a little bit of water in everybody's wine.

The amount per FTE paid for on behalf of K-12 students will more than double to $5.16 from the amount previously paid. With almost 4 million FTEs, and an increase of almost $3 per FTE over the previous negotiated rate, Access Copyright will reap a windfall of about $12 million a year from Canadian taxpayers - not counting those in Quebec.

Moreover, the decision eliminates the admittedly dubious “indemnity” scheme operated by Access Copyright for works not in its repertoire. The Board accepted Access's argument, without supporting evidence, that more than 99 per cent of works reproduced by educational institutions are currently part of its repertoire. That seems to be very counter-intuitive, considering the vast number of publishers and authors from around the world who have never heard of Access Copyright and the iffy international payment system for reprographic rights.

So - taxpayers in English Canada will pay out $12 million more per year and lose their indemnity scheme, which was about the only sensible thing about the previously negotiated deal from the user viewpoint, even if Access Copyright is not a licensed indemnity/insurance company.

The fair dealing analysis is complicated and inconclusive overall - but overall probably a real setback for users. The Board ruled that what the teachers do for the students (“upstream dealing”) isn't fair dealing. On the other hand, criticism by students needn't be communicated to the public to invoke fair dealing.

But the main problem with the fair dealing issue may have been that the Educators had agreed at an early stage of these proceedings to a survey methodology that resulted in evidence that by their later admission “needs to be collected differently” in light of the CCH v. LSUC case, even though it was obvious at the outset that the landmark CCH decision could and should affect what happens in Canadian schools. The Educators then tried to use a law professor's opinion to show that “most, if not all, photocopying in schools is fair dealing”, an approach that the Board naturally rejected, since it is for the Board to make this determination, not a professor. (If only the Board were so hard nosed on some of the other opinion evidence it accepts without question or even qualification of the witness!)

Incidentally, as I've said before on many occasions going back to the early days of this blog in early 2006, the educators in Canada - particularly the K-12 crowd under CMEC - apparently are still largely ignoring the potentially empowering and money saving potential of the CCH decision. CMEC still publishes and endorses and countless educators and school officials in Canada rely upon Copyright Matters! by Wanda Noel and Gerald Breau, which is aimed at teachers and which, as I have noted before, is overly cautious and was obsolete at the time of publication of the second edition in 2005. This is because it does not mention or appear to even take into account the landmark 2004 decision of the Supreme Court of Canada in CCH v. LSUC that opens the door to fair dealing for purposes of research or private study, and says in crystal clear language that copying of an entire work may well be fair dealing. As well, the CMEC publication perpetuates what is essentially an urban myth - that copying anything more than 10% of a work is illegal.

It may be that this excessively cautious approach to the CCH decision influenced the approach taken to the survey methodology that the Educators later tried to resile from.

In any event, and for whatever reasons, by the time the hearing took place, now almost two years ago, the evidence that the Educators may have needed on fair dealing may not have been available.

The Board used its usual complex methodology of crunching numbers to establish values - all of which is difficult to understand and normally impossible to reverse on judicial review.

This decision will set a dreadful precedent for higher education. If K-12 students generate $5.16 per year for AC, what will university students be worth? AC will argue that they will be worth several times more.

This will result in a huge windfall for AC now and down the line, which is suffering now from the decline of reprography in general. With the internet, reprography is much less important. AC will try to go digital. This could impact well beyond schools and universities to ISPs and others, especially if the educators get their educational exception for the internet and its inevitable “a contrario” implications. The educators enthusiasm for this proposed exception can ultimately only benefit AC.

Meanwhile, AC has budgeted an astonishing $915,000 for “Copyright Board applications” for 2009 - when there are no AC hearings scheduled. You can bet that this is going straight into the Mother of all cases aimed at post secondary copying. Will anyone step up to the plate to fight this really hard with a truly adversarial approach aimed at saving the taxpayers tens of millions of dollars? Based upon what we have seen in the past, it's very unlikely.

BTW, the real incongruity here is that American schools and universities simply don't face payments of this type. Worse still, these payments and the enormous bureaucracy required to support them also put a big chill on the use of material in the classroom - again, something that doesn't happen in the USA or other countries that are leaving Canada in the dust when it comes to competitiveness and innovation.

All of this is something to consider when we revise our Copyright Act and think about Canadian competitiveness and innovation. We have a series of incredibly picky little exceptions for educators and librarians, who have fared poorly in the legislative forum in the past. We need to think outside the box - and look no further than the USA to adopt classroom exceptions and make other changes such as “such as” language in the fair dealing provisions. Otherwise, Canadian taxpayers will get poorer, students will get less educated, and only collectives and their managers and counsel will continue to benefit.

Do we really want to pay more for less education?

Both sides may have a tricky task in succeeding in judicial review in this instance, because most of what the Board did appears to involve the assessment of evidence. There may be some scope for review on the legal results flowing from that evidence, but it may be hard to extricate the evidence from the legal issues - which would mean that the Board gets more deference.

However, given the deep and ultimately taxpayer funded pockets on both sides, a judicial review attempt by one or both sides would not be surprising.

HK

PS - there will be a whopping four year retroactive liability here of about $18 million a year starting in 2005-2006. That's about $72 million to date, of which about $40 million is additional to what was already presumably being paid at the old rate, allowing for a token discount of 10% to soften this blow. It'll be really interesting to see what AC does with all of this. Almost two of this four year period involved waiting for the Board to issue its decision after the hearing concluded. In fact, most of the hearing took place in June, 2007 with some follow up delayed unitl October of 2007 due to the illness of a key AC witness.